Jack from Ohio Posted February 16, 2009 Report Posted February 16, 2009 Client for several years. This year his business has a $40K net operating loss. I have verified that the NOL is legitimate. (he had a really bad year) My question is procedural. Should I include an explanation with the return when I file it, or will the IRS even pay attention to the note. This business has consistently shown profit (some years more than others) for the last 6 years. Maybe I am being paranoid, but I would rather send an explanation now, than sit across from an auditor and explain it. Quote
chadw Posted February 16, 2009 Report Posted February 16, 2009 Client for several years. This year his business has a $40K net operating loss. I have verified that the NOL is legitimate. (he had a really bad year) My question is procedural. Should I include an explanation with the return when I file it, or will the IRS even pay attention to the note. This business has consistently shown profit (some years more than others) for the last 6 years. Maybe I am being paranoid, but I would rather send an explanation now, than sit across from an auditor and explain it. I don't think an explanation is needed. Given the current economic times a loss is not unusual IMO. Quote
SUE A. Posted February 16, 2009 Report Posted February 16, 2009 I DONT THINK AN EXPLANATION WOULD EVEN BE NOTICED ON THE RETURN. SUE :scratch_head: Quote
jainen Posted February 16, 2009 Report Posted February 16, 2009 >>My question is procedural<< The procedure is to write the explanation and stick in your file. If and when the IRS ever has a question, you can fax it in and go on with life. Quote
TAXBILLY Posted February 16, 2009 Report Posted February 16, 2009 You might want to hold off on the NOL if you plan on carrying it back. The new law which will be signed by the President Tuesday, has a provision for year 2008 only, to carryback 5 years instead of 2. taxbilly Quote
Kea Posted February 17, 2009 Report Posted February 17, 2009 You might want to hold off on the NOL if you plan on carrying it back. The new law which will be signed by the President Tuesday, has a provision for year 2008 only, to carryback 5 years instead of 2. taxbilly I have one I'm working on right now. Carrying back 2 years works fine. They were in a higher tax bracket that year. If the 2008 return gets signed and turned in in the next day or 2, can I still use the 2 year carryback without specifying an election? Speaking of procedures.... I just e-file the regular 1040 and attachments without the 1045, right? I know the 1045 has to be mailed in. Thanks Quote
TAXBILLY Posted February 17, 2009 Report Posted February 17, 2009 I believe it's an option. taxbilly Quote
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